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Overview — Getting ready
Anthony Borgese, Partner, MinterEllison Lawyers
This subtopic introduces outsourcing and discusses some of the key decision-making processes taking place prior to engaging an outsourcing service provider. It looks at why organisations may choose to outsource, including the potential benefits that can be gained by such an arrangement and also touches on the potential pitfalls that organisations may encounter in doing so. The subtopic then looks at the due diligence process of an organisation assessing its own outsourcing requirements.
Why outsource?
Organisations outsource for many reasons, including increasing efficiencies, deriving cost savings or accessing the best of breed technologies and specialist know-how. With a wide range of outsourcing services offered, there is great scope for organisations to benefit from such services. However, what are the risks and do they outweigh the benefits that can be obtained from outsourcing? There is also a wide variety of outsourcing arrangements to choose from. And is there a difference between outsourcing and procurement?
See Why outsource?
Due diligence
Before embarking on the procurement process, the customer should carry out a due diligence review. The nature of this review will depend to some extent on whether the customer is outsourcing an existing function, or looking to acquire a new service or functionality that currently does not exist within the organisation.
Some issues that the customer should consider during this review include the following:
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Is the customer planning to outsource an existing function, looking to procure a new service, or both?
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If software and other IP are being used in the delivery of the services, then the customer should carry out an IP due diligence.
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The customer should be able to clearly define its requirements. This includes both the services that are to be acquired, and the relevant service levels for those services.
See Due diligence.
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